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Persistence Of Price-Cost Margins In The U.S. Food And Tobacco Manufacturing Industries: A Dynamic Single Index Model Approach

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  • Cranfield, John A.L.

Abstract

Persistence of price-cost margins in the U.S. food and tobacco manufacturing industries is measured while accounting for price-cost margin risk. Direct measurement of persistence and of long- and short-run price-cost margin risk is accomplished by incorporating a partial-adjustment framework into the Single Index Model. Results indicate persistence of price-cost margins. Short-run margin risk is accounted for primarily by diversifiable risk. Long-run margin risk, which depends on systematic risk alone, is generally lower than the short-run measure. Factors influencing persistence and the systematic relationship between industry margins and a market index are explored.

Suggested Citation

  • Cranfield, John A.L., 2002. "Persistence Of Price-Cost Margins In The U.S. Food And Tobacco Manufacturing Industries: A Dynamic Single Index Model Approach," Journal of Food Distribution Research, Food Distribution Research Society, vol. 33(2), pages 1-16, July.
    • Handle: RePEc:ags:jlofdr:26625
    DOI: 10.22004/ag.econ.26625
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    Cited by:

    1. Carlo Altomonte & Italo Colantone & Enrico Pennings, 2016. "Heterogeneous Firms and Asymmetric Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 64(4), pages 835-874, December.
    2. Getu Hailu & John Cranfield & Rawlin Thangaraj, 2010. "Do U.S. food processors respond to sweetener-related health information?," Agribusiness, John Wiley & Sons, Ltd., vol. 26(3), pages 348-368.

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